Respiri Limited

RSH Details

Respiri (ASX: RSH) is an Australia-based e-Health SaaS company that supports respiratory health management. The company has a market capitalization of ~$50.59 million as on June 23, 2021.

Result Performance (Half-Year Ended 31 December 2020 – H1FY21)

The company for the interim period reported a decline in total revenues by 43.8% YoY to $1.2 million. The performance of the company has been impacted by the COVID-19 led global supply-chain disruptions which adversely affected the timely sourcing of manufacturing materials. At the end of the interim period, the company had $11.44 million of cash in hand.

Key Data (Source: Company Reports)

Q3FY21 Cash Flows and Activities Report:

During the quarter ending in March, the company recorded operating cash outflows of $1.6 million, reflecting an improvement of 36% as compared to the quarter ended December and up 35% as compared to pcp. There were no major investing or financing cash flows recorded during the quarter. The company closed the quarter with cash and cash equivalents of $9.9 million.  

RSH onboarded three pharmacy banner groups covering about 1,000 stores (covering 22% of total Australian pharmacies). It is expecting to stock wheezo by over 2,000 pharmacies by June 2021. It had appointed Dr. Andrew Weekes as a strategic advisor to the Board. During the period, RSH received clearances from the Food and Drug Regulator for wheezo to be marketed in the US market. It had kept R&D expenses down by $0.15 million. Production and operating costs were also declined by 76% (QoQ). It had closed the period with a cash balance of $9.86 million.

During the quarter, the company announced an agreement with Terry White Chemmart (TWC). TWC started ranging wheezo in April and will progressively rollout the ranging in May and June.

Outlook:

The company is expected to lose out ~$6-8 million of SAAS subscription for FY21 due to lockdowns and vaccination rates. Nevertheless, the management is optimistic to cover 44% of community pharmacies with wheezo. It is also expecting to drive down manufacturing costs and align sales strategies effective second half of the current year.

Key Risks:

The company is exposed to various governance issues for exports and drug compliance. One of the major inherent risks is the uncertainty of patent protection and proprietary rights during various trials.

Technical Overview:

Daily Chart:

Note: The purple color line shows RSI (14-period) while the green color histograms at the bottom of the charts represent volumes. The red and sky blue color lines indicate 21-period SMA and 50-period SMA respectively.

RSH's prices are forming a series of lower lows and lower highs, indicating a downside trend for the stock. On the daily chart, the leading indicator RSI (14-period) is trading in negative territory at ~45.99 levels and prices are also sustaining below the trend-following indicators 21-period SMA and 50-period SMA, further supporting a negative stance. An immediate resistance level for the stock is at AUD 0.110 while support is at AUD0.059 level.

Stock Recommendation:

The company’s current ratio of 10.94x and debt-to-equity ratio of 0.01x for H1FY21 came much improved than the industry median of 3.13x and 0.10x, respectively. However, its EBITDA margin and net margin for H1FY21 are in deep negative and much below the industry median. The stock of the company has made a 52-week low and high of $0.061 and $0.250, respectively.

Considering the outlook as well as the risks associated (mentioned above), we advise the market players to liquidate the stock.

Thus, we give a “Sell” rating on the stock at the current market price of $0.082 per share (Australia time: 11:14 am) on 23^rd June 2021.

Angel Seafood Holdings Ltd

AS1 Details

Angel Seafood Holdings Ltd (ASX: AS1) is the Southern Hemisphere’s largest producer of certified organic and sustainable pacific oysters. The company has a market capitalization of ~$21 million as on June 23, 2021.

Q1FY21 Update:

During the first quarter of FY21, the company reported 15% YoY increase in revenue to $1.0 million on the back of 21% YoY increase in the sale of oyster to 1.3 million. The period witnessed underlying prices remaining steady before increasing at the end of March. Cash receipts from customers during the quarter were $0.9 million, up 14% on pcp.

Key Data (Source: Company Reports)

Result Performance (Six Months Ended 31 December 2020) (FY20-S)

The revenue of the company jumped by 52% YoY to $3.8 million driven by sales of 5.1 million oysters. This indicates the continuing strength of the business model and its ability to accelerate further. It delivered an NPAT of $719K and generated a positive operating cash flow of $175K. 

Outlook:

The company’s growth initiatives towards doubling production and increasing profitability are progressing well and are being supported by the commencement of FlipFarm construction; ‘Summer oysters’ on track to be available for sale next summer; and Additional 10Ha of water acquired in Streaky Bay, providing further expansion options. The company is building the Angel brand to improve pricing. The company’s brand presence, growing recognition of the ability to assure continuous supply of organic oysters to the retail channel, as well as the return of demand from the restaurant channel could help the company moving forward. Importantly, it is increasing export volumes into premium export markets. Broadly, the management is completely focused on its sales initiatives and on further progressing its 3-pillar growth strategy with a target to increase capacity and sales.

Key Risks:

The company has to deal with the risk of inventory becoming obsolete and has to take steps in order to preserve the oysters.

Technical Overview:

Weekly Chart –

Source: REFINITIV

Note: Purple colour lines are Bollinger Bands® with the upper band suggesting overbought status while the lower band oversold status, and yellow lines are Fibonacci retracement lines which measure price rebound and backtrack. https://www.bollingerbands.com/

The stock following the existing down trend, has given a weaker close for the ongoing week at $0.135. The technical indicator RSI with a reading around 42 and a curve at the end pointing down, suggests neutral to weak momentum for the stock.

Going forward, the stock may have resistance around the 61.8% retracement level of $0.16 whereas support could be around the previous low of $0.09.

Stock Recommendation:

The company’s debt-to-equity ratio for FY20 stood at 0.42x, higher than the industry median of 0.28x. Besides, the seafood business has been suffering from the ongoing travel restrictions, and with the emergence of a new variant of Corona, the foodservice business is likely to suffer further. The stock has made a 52-week low and high of $0.095 and $0.275, respectively. 

Considering the aforesaid facts, and current trading levels, we give a “Sell” rating on the stock at the current market price of $0.135 per share, up by 3.846% as on 23^rd June 2021.

PharmAust Ltd

PAA Details

PharmAust Ltd (ASX: PAA) is a clinical-stage firm and is engaged in developing targeted cancer therapeutics for human and animal healthcare. The company has expertise in repurposing marketed drugs lowering the risks and costs of development.

H1FY21 Results Performance (For the Period Ended 31 December 2020)

The company has registered a decline in its revenue during the period and revenue from contracts with customers reduced to $1.10 million from $1.76 million in H1FY20. Meanwhile, it has posted an increase in its loss after tax to $0.832 million in H1FY21 from $0.485 million in H1FY20.

Key Data (Source: Company Reports)

Quarterly Performance Update (For the Quarter Ended 31 March 2021)

The company reported that six dogs with stage 4 to 5 B-cell lymphoma completed the assessment throughout the 5 participating trial sites. The Phase IIb trial interim analysis has showcased additional supportive evidence of the monepantel blood plasma levels that is essential to suppress B cell lymphoma growth in pet owners’ dogs.

Syngene has started the manufacture of GMP-Grade Monepantel for the purpose of human clinical trials. The indicative data generated from Leiden University Medical Center further showed that MPL and MPLS continue to reveal antiviral activity in non-human primate systems.

Key Risks

The company is exposed to the risks related to the COVID-19 pandemic. Notably, the recruitment for the phase II Canine Trial at some clinics was put on hold. This was because of COVID-19 pandemic as well as related shutdown measures. Also, the key risks arising from the company’s financial instruments include cash flow interest rate risk, liquidity risk as well as foreign exchange risk.

Outlook

PAA is engaging with major global veterinary pharmaceutical players to commercially license MPL for anti-cancer treatments in the pet animals. The company is discussing with prospective oncologists in Italy and the United Kingdom in order to undertake the Phase II human cancer trial.

Technical Overview:

Weekly Chart –

Source: REFINITIV

Note: Purple colour lines are Bollinger Bands® with the upper band suggesting overbought status while the lower band oversold status, and yellow lines are Fibonacci retracement lines which measure price rebound and backtrack. https://www.bollingerbands.com/

The stock has been experiencing a low volatility while trading in a narrow range provided by 20 periods SMA of $$0.098 on the upside and the lower Bollinger band of $0.090 on the downside. It has however, given close for the ongoing week at $0.089. The technical indicator RSI with a reading around 40 and a curve at the end pointing down, suggests neutral to weak momentum.

Going forward, the stock may have resistance around $0.090 whereas support could be around $0.070.

Stock Recommendation

The company has the cash position of $3.94 million as at 31^st March 2021. The stock declined by ~28.7% in 9 months and by ~19.09% in 6 months. It has made a 52-week low and high of $0.090 and $0.275, respectively.

However, considering the current trading levels and the associated business risks of delay in regulatory approvals and disruption in supply chains owing to the global pandemic, we give a “Sell” rating on the stock at the current market price of A$0.089 per share, down by 3.261% on 23^rd June 2021.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

• Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

• Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

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